Hospitals flex lobbying muscle

For all the hits the hospital industry took in the final fiscal cliff deal, it managed to persuade Congress to avoid some of the biggest cuts that had been looming over it for years: cuts to outpatient payments, graduate medical education and “bad debt” payments.

The hospitals aren’t celebrating — Congress still cut the industry elsewhere, and hospital lobbyists insist those savings will be painful. But the fact that hospitals escaped the most widely expected cuts shows that the industry still holds real power with lawmakers.

Story Continued Below

A month ago, most health insiders expected any fiscal cliff — and Medicare physician payments — plan to include at least one or even all three of those proposals. Each cut had been blessed by MedPAC or Obama administration deficit plans.

But when legislative text of the fiscal cliff plan began circulating in Washington just as the calendar turned to 2013 early on New Year’s Day, cuts to those three areas were not in the bill.

It’s the second time that the evaluation and management, or E/M cuts — which would result in hospitals and physician offices getting the same payment for outpatient treatments — have been at the top of the list of hospital savings options, only to disappear amid aggressive lobbying from the hospital groups, including the American Hospital Association, Federation of American Hospitals and the Association of American Medical Colleges, among others.

It even made it into the House’s 2011 payroll tax bill, only to be deleted by the time the Senate bill came out.

And it’s the latest deficit plan that doesn’t hit graduate medical education money or bad debt payments — two very tempting proposals that have appeared in just about every Washington deficit-reduction white paper.

It’s partly a reflection of the strength of the hospital sector in Washington. Hospitals have some of the strongest lobbying muscle because every member of Congress has at least one in their district. They don’t just provide needed health care but are typically one of the largest employers, too.

“They’re just pretty powerful,” said a health lobbyist outside of the hospital sector. “Outside of the [Washington trade associations], individual hospitals talk to their members and say, ‘This is a BFD. This will hurt us.’ They’re winning the local grass roots.”

In the weeks leading up to a fiscal cliff deal, several hospitals in states with prominent lawmakers — Montana, Utah, Michigan, Texas, Ohio and New York, to name a few — sent notes to their representatives in Washington, explaining why the E/M cuts would be such a disaster if Congress were to pass them.

“Having our local university teaching hospitals weigh in really all over — including to leadership and Finance — was probably the key,” said Atul Grover, chief public policy officer at the Association of American Medical Colleges.